Estate Agency Makes Good Profits in Declining Market

Good news for Estate agents Winkworths who have unveiled a remarkable success story for this year – increasing its sales volumes and revealing that it wants to go on a buying spree.The firm is on target to beat its full-year profit forecasts after growing revenue by 20% in the first nine months.

This is despite low transaction volumes, especially outside London, and a drop in prices compared with the first half of the year.

Yet despite operating in a low-volume market, Winkworth has gained significant market share, with existing franchisee offices reporting a 42% increase in the number of properties sold. Six new franchisees also reported strong sales. The firm has also recently set up a country house department.

Applications from would-be franchisees have doubled over the last year, from 54 to 107.

The group now has 88 outlets in total, of which 58 are in London and 20 outside London. A further six branches are in Portugal and six in France.

In the UK, a further two offices are due to open by the end of this year, and a spokeswoman said that the target for next year is to open a further ten.

In a trading statement covering July to September 2010, the group said it is also looking to buy businesses: “Our balance sheet continues to strengthen and we are further exploring opportunities to acquire small to mid-sized chains of franchised offices to incorporate into the Winkworth brand.”

The firm, which was founded by Simon Agace and is now run by his son Dominic, floated on AIM last November. The move raised £1.1m and valued the company at just over £9m.

However, the firm has warned that low transactions will continue next year, with the market to be determined by interest rates, financing availability for first-time buyers and the impact of austerity measures, especially outside London.

The firm’s statement says: “We expect to see prices continuing to move upwards in prime markets, perhaps by a further 5%, underpinned by low interest rates and a discounted currency. Less prime markets are expected to see a consolidation in pricing levels after having retreated by 5-10% in the second half of 2010.

“In the private rental sector, we envisage an ongoing shortage of supply, created by a lack of investment over the last three years and by sales of buy-to-let properties by landlords looking to de-leverage their portfolios. This should ensure ongoing upward pressure on rents and we anticipate that, on average, these may increase by 5% in 2011.”

It adds: “We remain confident of our organic growth and, with a robust business model bolstered by the impact of new office openings, expect to continue to grow our market share.”